A new cross-licensing pact ends a six-quarter gap in which Huawei contributed nothing to Qualcomm's licensing revenue. Neither side will say how much money changes hands, or in which direction.
Qualcomm stock was indicated about 2.9% higher before Monday's open, at $190.28 against Friday's close of $184.87, while chip stocks as a group edged lower. The reason was a deal with a company that has not paid Qualcomm a royalty since early 2025.
Huawei and Qualcomm said they had agreed to license each other's patents for several years in a pact spanning 5G, computing, artificial intelligence and networking. As a second leg, Qualcomm will acquire a set of Huawei's U.S. patents in computing, AI, networking and other technologies, a purchase that still needs regulatory clearance before it can close.
That is close to the full extent of what was disclosed. There is no length of term beyond "multi-year," no royalty rate, no upfront payment, no price for the patents and no indication of which company pays the other on a net basis.
Sizing a missing licensee
Qualcomm's annual report explains why investors care. Its QTL licensing unit has excluded Huawei royalties since the second quarter of fiscal 2025, when the prior license lapsed. Since then QTL has run without one of the world's largest phone makers on its books.
The unit has been treading water in the meantime. Licensing revenue was $5.58 billion in fiscal 2025. In the June quarter, QTL revenue slipped 3% from a year earlier to $1.28 billion, even though nine-month revenue was up 1.9%. Because the segment keeps most of its revenue as profit, with a pretax margin of 72% in fiscal 2025, even a modest Huawei stream would show up clearly in earnings.
History offers a sense of scale, with caveats. In fiscal 2018, Qualcomm booked $600 million under an interim arrangement with Huawei, a sum equal to roughly 11% of QTL's fiscal 2025 revenue. In the fourth quarter of fiscal 2020 it recognized $1.8 billion tied to a settlement and a new license. Both figures included catch-up amounts and overstate what a normal year would look like.
Who gets the better end
The two companies described the same agreement in different terms. "This agreement reaffirms industry recognition of Qualcomm's 5G technology leadership and the success of Qualcomm's 5G SEP licensing program," said John Han, who runs QTL. Huawei's chief intellectual property officer, Alan Fan, said it "demonstrates the value of Huawei's innovations, but also recognizes Qualcomm's foundational contributions."
Those statements frame the open question. In a cross-license where one side also buys the other's patents, the net cash flow can run either way. A deal in which Huawei pays running royalties is materially positive for QTL. A deal in which the royalties are largely offset by what Qualcomm pays for Huawei's patents is closer to neutral.
What the deal does not change is Huawei's status as a chip customer. Washington revoked Qualcomm's export license for Huawei in May 2024, and Qualcomm has warned that Huawei's gains in handsets at the expense of its other customers can hurt results.
Two renewals in two weeks
The pact follows Qualcomm's Sept. 24 announcement that it had renewed its license with Apple, effective April 1, 2027. With both settled, two of the largest names in its licensing book are now secured for the coming years.
What to watch: Qualcomm previously guided QTL revenue of $1.2 billion to $1.4 billion for the September quarter. Guidance for the December quarter above that range, at its next earnings report, would be the first hard evidence that Huawei is paying.